(COA, Chapter 7) The choice of the financial auditor is regulated under the Finnish Audit Act (tilintarkastuslaki).
According to that law, small enterprises are exempted from the obligation of having their accounts audited. It is permitted not to elect the auditor if only one of the minimum criteria is met during the ended accounting period and the immediately preceding accounting one. These minimum criteria are:
- the annual balance sheet exceeds € 100,000;
- the turnover or the corresponding revenue exceeds € 200,000;
- more than three persons are employed on average.
Even if the Audit Act does not require any auditor, the cooperative’s rules can stipulate that one must be chosen. In this case, the internal rule is mandatory, and the cooperative is required to have one.
The Finnish Cooperatives Act contains provisions relating to performance audits and performance auditor. According to the Audit Act, the new act requires small cooperatives incorporated after the beginning of year 2014 to elect a performance auditor for the cooperatives not required to elect a financial auditor. However, the rules of the cooperative can stipulate that it will not select any performance auditor.
A blocking minority of members can, in any case, demand that a financial auditor or a performance auditor be chosen. This applies even to those cases exempted from electing any auditor under the cooperative rules.
Concerning the performance auditor, there is no professional qualification required, unlike for the financial auditors. This does not mean that any layman could be designated as the performance auditor. The Finnish Cooperatives Act assumes the performance auditor has the necessary knowledge and experience of financial and legal affairs proportionally to the nature and the extensiveness of the cooperative’s operations in question.
The performance auditor has to be independent of the cooperative and its administration. According to the Cooperatives Act, the performance auditor is not allowed to be, amongst others, a member of the board of directors, the managing director, a near relative of these, or a person employed by the cooperative. A cooperative member can work as its performance auditor if the person satisfies the independence requirements and has adequate knowledge.
If a financial auditor is chosen, the cooperative must have a certified auditor, i.e., a qualified auditor (authorized by Finland Chamber of Commerce, “KHT-tilintarkastaja,” or by a local Chamber of Commerce, “HTM-tilintarkastaja”) or a qualified audit firm. The auditor can be chosen until further notice or for the term indicated in the rules.
In cooperatives listed on stock exchanges, at least one of the auditors must be a qualified auditor or a qualified auditor firm authorized by the Finland Chamber of Commerce.
For more details on cooperatives’ bodies, see chapter Guidance for drawing up of rules.